Government to Increase Social Sector Spending through Plan Outlay?

Modi government is also expected to spend more on social sector schemes in this fiscal year.

While the Modi government has shown all indications of bringing out a business-friendly Budget in the coming week, it is also expected to spend more on social sector schemes this fiscal year.

The NDA government might increase the plan expenditure, which entails the government spending on social sector schemes by ₹11,000 crore in the Union Budget 2014-15, according to latest news reports. The increase would be equivalent to a two percent rise in the plan expenditure compared to the budget for the last fiscal year, Press Trust of India reported.

The outgoing United Progressive Alliance (UPA) -government had provided ₹5.55,322 crore for plan expenditure in its interim budget that was released in February.

The plan outlay, also known as the gross budgetary support (GBS), refers to the amount the government spends on social schemes such as the National Rural Health Mission and the Mahatma Gandhi National Rural Employment Guarantee Scheme. It forms the smaller chunk of the government's total expenditure, usually at about 30 percent.

"The new government may increase GBS by ₹11,000 crore which would be around two percent higher than ₹5,55,322 crore provided in the 2013-14 budget," a source told PTI. He added that the final plan expenditure figure was already decided for the Budget, which will be presented by Finance Minister Arun Jaitley in the parliament on 10 July. The budget session will begin on 7 July.

However, another senior official was quoted as saying that an increase in plan spending would be impossible given that the government has to keep the fiscal deficit in check. Fiscal deficit represents the difference between what the government spends and what it earns.

In fact, the UPA-government had also kept in mind the fiscal deficit during the last budget session, and had cut the total plan outlay to ₹4.75 lakh crore for the fiscal year 2013-14 as compared to the budget estimates of ₹5.55 lakh crore. The UPA government had adopted a similar approach of slashing the plan expenditure in the previous budget as well, as reported by PTI.

The fiscal deficit in 2013-14 stood at 4.5 percent of Gross Domestic Product (GDP), lower than the 4.6 percent projected in the revised estimate. The reduction in the deficit compared to the estimates was mainly because of the government's efforts to curb expenditure.

The social sector schemes by the government range from offering scholarship programs to students to providing employment and health benefits.